Conference Call Presentation

FY2019 Results and FY2020 Profits

(Pre COVID-19 Basis)

May 20, 2020

Tokio Marine Holdings, Inc.

◆Abbreviations used in this material

TMNF
: Tokio Marine & Nichido Fire Insurance Co., Ltd.
NF
: Nisshin Fire & Marine Insurance Co., Ltd.
TMNL
: Tokio Marine & Nichido Life Insurance Co., Ltd.
TMHCC
: Tokio Marine HCC
TMK
: Tokio Marine Kiln

Table of Contents

  • I. Highlight
-
FY2019 Financial Results
・・・ 3
- FY2020 Profits (Pre COVID-19 Basis)
・・・ 4
- FY2020 Profits (Impacts of COVID-19)
・・・
6
-
Main Impacts of COVID-19 and Our Responses
・・・
7
  • II. FY2019 Results
Consolidated Results Overview
・・・ 9
  • Domestic Non-Life
-
TMNF Financial Results
・・・ 10
-
TMNF Combined Ratio
・・・ 11
- TMNF NPW & Loss Ratio
・・・ 12
- TMNF Asset Management Results
・・・ 13
-
NF Financial Results
・・・ 14
Domestic Life
-
TMNL Financial Results
・・・ 15
  • International Insurance Business
-
Net Premiums Written
・・・ 16
-
Business Unit Profits
・・・ 17
-
Philadelphia
・・・ 18
-
Delphi
・・・ 19
-
TMHCC
・・・ 20

Copyright (c) 2020 Tokio Marine Holdings, Inc.

  • III. FY2020 Profits (Pre COVID-19 Basis)
Consolidated Profits Overview (Pre COVID-19 Basis)
- Adjusted Net Income, Business Unit Profits
・・・ 22
Domestic Non-Life
- TMNF Profits (Pre COVID-19 Basis)
・・・ 23
Domestic Life
- TMNL Profits (Pre COVID-19 Basis)
・・・ 24
International Insurance Business
-
Net Premiums Written
・・・ 25
-
Business Unit Profits
・・・ 26
  • IV. Economic Solvency Ratio
-
Target Range of Economic Solvency Ratio
・・・28
-
ESR and Sensitivity
・・・29
■ Reference
・・・30

1

I. Highlight

Copyright (c) 2020 Tokio Marine Holdings, Inc.
2

FY2019 Financial Results

Consolidated Domestic Life

Domestic

Top-line

Non-Life

International

Net premiums written grew 4.1% YoY*1 on the back of strong fundamentals.

Life insurance premiums shrank 6.8% YoY mainly due to the sales suspension of some corporate products in Japan.

  • Net premiums written

¥3,598.3bn

(+4.1% YoY*1)

  • Life insurance premiums
    ¥981.9bn

(-6.8% YoY)

Bottom-line

  • Increased in all domestic lines (+3.7%), especially in fire insurance
  • Grew overseas (+4.8%*1), despite a drop caused by the underwriting practice focusing on profitability, thanks to the business expansion and rate increase in each business and the new consolidation of Safety
  • Declined 6.2% in Japan due to the sales suspension of some corporate products
  • Declined 7.8% overseas mainly due to the underwriting practice focusing on profitability in

North America

*1 Figure excluding the impact of the divestment of reinsurance businesses

Consolidated net income shrank ¥14.8bn YoY, despite a decline in natural catastrophes in Japan and overseas and strong investment results in North America, for the provision of the domestic catastrophe loss reserve (including special provisions) and for the reserve provision in North America.

Adjusted net income rose ¥5.7bn YoY as it excludes factors such as the catastrophe loss reserve, gains/losses on sales of ALM bonds, and losses on the divestment of reinsurance businesses.

Consolidated net income
-14.8 YoY

(billions of JPY)

(net income attributable to owners of the parent)
Domestic Non-
Domestic
International
Reinsurance
Other*4
Life (DL)
Insurance
¥259.7bn
Life (DNL)*2
+9.4
-5.1
-28.3
+7.0
+2.2
Nat. cat
(-¥14.8bn YoY)
+57.1
Gain on sales
Reversal effect
of ALM bonds
- Decline in nat. cat. (+9.7)
of losses on
+13.4
- Strong investment results in North
divestment of
274.5
America
reins. biz.
One-time
Other
+22.5
259.7
Cat. loss
Adjusted net income
factors*3
reserve
+4.3
+36.4
-47.8
FY2018
(Special
Other
FX rate
Reins. biz.
¥286.7bn
fluctuation
results
Provision -25.9)
-50.9
Reserve
-13.0
-6.5
provision in
(+¥5.7bn YoY)
- Securities valuation losses in TMNF (-18.3)
- Provisions for natural catastrophe underwriting
North America
reserves in TMNF (-15.2), etc.
-32.1
FY2018
*2 After consolidation adjustments
FY2019
*3 Impact of change in U.S. GAAP and consolidation of a U.S. insurance agent
3
Copyright (c) 2020 Tokio Marine Holdings, Inc.
*4 Amortization of goodwill, purchase method adjustments, etc.

FY2020 Profits (Pre COVID-19 Basis)

Consolidated Domestic Life

Domestic

Non-Life International

Given the difficulty in making a reasonable estimate of the impact of COVID-19, FY2020 profits are not available at present. We will promptly disclose them when it becomes possible to make a reasonable calculation.

Figures based on our actual capabilities, excluding the impact of COVID-19, are expected to improve steadily thanks to the growth of each business.

approx. +30.0 YoY
Consolidated net income
International
DNL*1
DL
Other*2
(Without factoring in the impact
insurance
+38.8
+5.6
-6.9
-7.3
of COVID-19)
Reversal effect
New
of reserve
Nat. cat.
consolidation
provision in
+84.5
North America
of Pure
Approx. ¥290.0bn
Other
+34.8
+8.8
+33.5
Amortization
(approx. +¥30.0bn YoY)
FX rate
of Pure's
Other
259.7
fluctuation Nat. cat.
intangible
Cat. loss
-3.9
-18.6
fixed assets,
-11.2
Reversal
etc.
reserves
-66.1
effect of
- Absence of impairment losses on
-17.1
gains on
securities in TMNF (+22.1)
sales of ALM
- Improvement to loss ratio and increase
- Drop in investment income (approx. -20.0)
bonds
in revenue in TMNF, etc.
- Profitability improvement in Lloyd's, etc.
-13.1

(billions of JPY)

approx.

290.0

FY2019
*1
After consolidation adjustments
FY2020
*2
Amortization of goodwill, purchase method adjustments, etc.
(Pre COVID-

19 Basis)

  • Adjusted net income

(Without factoring in the impact of COVID-19)

Approx. ¥410.0bn

(approx. +¥120.0bn YoY)

Nat. cat.

+84.5

286.7

approx. +120.0 YoY

DNL
Reversal effect of
reserve provision in
Other
DL
North America
+33.5
+5.6
+34.8
FX rate
fluctuation
Nat. cat.
-3.9
-18.6
  • Absence of impairment losses on securities in TMNF (+18.4)
  • Improvement to loss ratio and increase in revenue in TMNF, etc.
International
(billions of JPY)
insurance
New
consolidation
approx.
of Pure
+8.8
410.0
Other
Other*3
-11.2
-10.2
  • Drop in investment income (approx. -20.0)
  • Profitability improvement in Lloyd's, etc.

FY2019FY2020

*3 Adjustment from consolidated net income to adjusted net income, etc.
(Pre COVID-
19 Basis)
4
Copyright (c) 2020 Tokio Marine Holdings, Inc.

[Reference] Nat. Cat. Losses & Cat. loss reserves

Consolidated Domestic Life

Domestic

Non-Life International

Net incurred losses relating to natural catastrophes (business unit profit basis)

(billions of JPY)

(Before tax)
FY2019
FY2020
YoY
FY2019
(original
change
projections)
DNL
174.7
58.0
-116.7
52.5
Overseas
21.1
49.0
+27.8
46.0
Total
195.8
107.0
-88.8
98.5
(After tax*1)
FY2019
FY2020
YoY
FY2019
(original
change
projections)
125.9
41.8
-84.1
37.8
16.8
38.0
+21.1
36.0
142.7
79.8
-62.9
73.8

*1 After-tax figures are estimates.

Catastrophe loss reserves in TMNF

End of FY2019
Fire
197.7
Others
702.9
Total
900.6

(billions of JPY)

End of FY2020

Approx. 220.0

Approx. 690.0

Approx. 910.0

Copyright (c) 2020 Tokio Marine Holdings, Inc.
5

FY2020 Profits (Impacts of COVID-19)

Impact of COVID-19 from January to March in 2020 is as below

  • Overseas (1Q in FY2020)

Impacts on adjusted net income

(estimate)

Underwriting-¥5.0bn*

*: For key entities in Europe and the U.S.
-¥32.0bn
Investment
(Including valuation losses
of stocks, etc. of -¥24.0bn)

Supplemental explanations

  • Mainly payments for event cancellation
  • Mainly valuation losses* and impairment

of stocks, etc.

*: Market price fluctuation is recognized in PL

  • Japan (4Q in FY2019)
Underwriting
-¥4.0bn
Mainly payments for special products

Investment-¥20.0bn Mainly impairment of stocks, etc.

Copyright (c) 2020 Tokio Marine Holdings, Inc.
6

Main Impacts of COVID-19 and Our Responses

Main impacts

Japan (TMNF)
•Auto: NPW will decrease due to a smaller number of new vehicle sales
Meanwhile, net incurred losses will shrink as the traffic volume decreases
• P.A.: NPW will shrink in travel insurance with the smaller number of travelers
Underwriting
• Marine: NPW in cargo insurance will decline as the global distribution volume
drops
• Specialty: Expect payments for some riders (specific industries, etc.) that
explicitly cover communicable diseases
Overseas
• Event Cancellation: Expect certain payments for medium and large-size events
• BI: Expect payments for limited contracts that explicitly cover communicable
diseases
• Credit / Surety: The impact will depend on the degree of economic recessions
Investment
• Income yield may drop due to lower interest rates

• Valuation losses under U.S. GAAP due to falls in stock prices

• Impairment losses to credit risk assets following the rising default rate

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Our situation/policy

The impact of COVID-19 is expected to be controlled to a certain level through risk controls based on appropriate retention policy and business diversification

Continue seeking long-term, stable income based on the characteristics of insurance liabilities regardless of market fluctuations

7

II. FY2019 Results

End of Mar.

(DNL/Life)

End of Dec.

(International)

Applied FX rate (USD/JPY)

FY2018
FY2019
JPY110.99
JPY108.83
（-JPY4.75 from Mar. 2018)
(+JPY2.16 from Mar. 2019)
JPY111.00
JPY109.56
(+JPY2.00 from Dec. 2017)
(+JPY1.44 from Dec. 2018)
Copyright (c) 2020 Tokio Marine Holdings, Inc.
8

Consolidated Results Overview

Consolidated Domestic Life

Domestic

Non-Life

International

(billions of JPY, except for %)

YoY

FY2018 FY2019 Change %

Total premiums
■Total premiums
4,640.9
4,580.2
- 60.6
- 1.3%
grew by 1.5% and
Net premiums written (TMHD Consolidated)
3,587.4
3,598.3
10.9
+ 0.3%
NPW rose by 4.1%,
Life insurance premiums (TMHD Consolidated)
1,053.5
981.9
- 71.6
- 6.8%
when excluding the
impact of the
divestment of reins.
■Ordinary profit (TMHD Consolidated)
416.3
363.9
- 52.3
- 12.6%
biz. (-129.7）.
Tokio Marine & Nichido
315.3
223.9
- 91.4
- 29.0%
Nisshin Fire
5.0
5.7
0.7
+ 14.1%
Tokio Marine & Nichido Life
39.9
50.3
10.4
+ 26.1%
Overseas subsidiaries
189.0
175.8
- 13.2
- 7.0%
Financial and general
6.2
7.2
1.0
+ 16.1%
Elimination of dividends received by Tokio Marine & Nichido from subsidiaries etc.
- 95.6
- 60.6
35.0
Purchase method adjustments
- 2.9
- 5.4
- 2.5
Amortization of goodwill and negative goodwill
- 35.1
- 36.6
- 1.5
Others (Consolidation adjustments, etc.)
- 5.7
3.5
9.2
■Net income attributable to owners of the parent
274.5
259.7
- 14.8
- 5.4%
Page 3 shows
261.3
169.9
- 91.4
- 35.0%
Tokio Marine & Nichido
Domestic Non-Life
Nisshin Fire
4.4
3.7
- 0.6
- 14.7%
posted a consolidated
net loss of ¥28.3bn.
Tokio Marine & Nichido Life
27.3
34.2
6.8
+ 25.1%
This reflects, in
addition to
155.1
144.3
- 10.8
- 7.0%
Overseas subsidiaries
"Elimination of
Financial and general
2.7
3.1
0.3
+ 13.5%
dividends received by
TMNF," the
elimination of the
Elimination of dividends received by Tokio Marine & Nichido from subsidiaries etc.
- 95.6
- 60.6
35.0
impact of the
Purchase method adjustments
- 2.4
- 3.8
-1.4
divestment of reins.
biz. (-13.1) and
Amortization of goodwill and negative goodwill
- 35.1
- 36.6
- 1.5
valuation losses on
Others (Consolidation adjustments, etc.)
- 43.3
5.4
48.8
affiliate shares
included in "Others
(Consolidation
adjustments, etc.)"
Copyright (c) 2020 Tokio Marine Holdings, Inc.
9

TMNF Financial Results

Consolidated Domestic Life

Domestic

  • Changes in Major P/L Items

Non-Life

  • Underwriting Profit

International

(billions of JPY)

FY2018
FY2019
Results
Results
YoY
Change
Underwriting profit/loss
89.1
38.4
- 50.7
(Underwriting profit/loss: excluding provision/reversal of
- 42.2
- 27.5
14.7
catastrophe loss reserves)
Net premiums written (Private insurance)
1,895.0
1,969.9
74.8
Net premiums earned (Private insurance)*1
1,875.9
1,917.2
41.2
Net incurred losses (Private insurance)*2
- 1,312.7
- 1,270.8
41.9
Natural catastrophe losses
- 238.4
- 162.5
75.9
Provision/Reversal of foreign currency denominated
- 3.8
2.0
5.8
outstanding claims reserves
Other than above
- 1,070.4
- 1,110.3
- 39.8
Business expenses (Private insurance)
- 611.1
- 638.2
- 27.0
Provision/Reversal of catastrophe loss reserves
131.4
66.0
- 65.4
Auto
18.7
18.0
- 0.7
Fire
123.5
41.5
- 81.9
Net investment income (loss) and other
223.5
182.0
- 41.4
Net investment income/loss
258.7
220.7
- 37.9
Interest and dividends
224.4
189.2
- 35.1
Dividends from foreign stocks
102.9
63.0
- 39.8
Gains/Losses on sales of securities
96.1
110.6
14.5
Impairment losses on securities
- 3.7
- 22.1
- 18.3
Gains/Losses on derivatives
- 19.6
- 15.7
3.9
Ordinary profit/loss
315.3
223.9
- 91.4
Extraordinary gains/losses
6.1
- 12.6
- 18.8
Net income/loss
261.3
169.9
- 91.4
*1 Excluding provision for nat-cat underwriting reserves
*2 Including loss adjustment expenses
(Notes)
  1. Plus and minus of the figures in the above table correspond to positive and negative to profit respectively
  2. Private insurance includes all lines excluding compulsory automobile liability insurance and residential earthquake insurance

Copyright (c) 2020 Tokio Marine Holdings, Inc.

¥50.7bn drop YoY to ¥38.4bn mainly reflecting the following factors:

  • Net premiums written (Private insurance) (See p.12 for details):
    • Increase in all lines mainly in fire
    • Net incurred losses (Private insurance):
      • Decrease in net incurred losses relating to natural catastrophes (¥75.9bn)
      • Decrease in provision for foreign currency denominated outstanding claims reserves due to FX fluctuations
      • Increase in net incurred losses due to NPW increase and increase in large and medium size losses
    • Business expenses (Private insurance):
      • Increase in agency commissions and business expenses associated with NPW increase and consumption tax increase
    • Catastrophe loss reserves:
      • One-offspecial provision for fire insurance (-¥36.0bn)
      • Drop in takedown associated with a drop in claims paid relating to natural catastrophes, etc. (-¥32.0bn)
    • Others:
      • Provision for underwriting reserves relating to natural catastrophes (-¥21.1bn)
      • Increase in provision for the general underwriting reserves (underwriting result for the first year) due to profitability improvement of auto, etc. (-¥19.3bn)
  • Net Investment Income and Other (See p.13 for details)

¥41.4bn decrease YoY to ¥182.0bn mainly due to the absence of dividends following reinsurance businesses divestment in FY2018 and impairment losses on securities associated with drop in market prices of business-related equities

  • Extraordinary Gains/Losses

¥18.8bn decrease YoY to -¥12.6bn mainly due to the reversal effect of gains of reinsurance businesses divestment in FY2018 and losses on valuation of affiliate shares

- Net Income

¥91.4bn decline YoY to ¥169.9bn due to the factors above, etc.
10

TMNF Combined Ratio

Consolidated Domestic Life

Domestic

■ Combined Ratio (Private insurance: E/I basis)

* ( ): YoY change

102.2%
98.7%
（-3.6pt）
93.9%

Non-Life

  • E/I Basis Loss Ratio

International

E/I Loss Ratio*1
61.4%
70.0%
66.3%
（-3.7pt）
Impact of natural
catastrophes (pt)
4.4
12.7
8.5
Expense Ratio
32.5%
32.3%
32.4%
（＋0.1pt）
(billions of JPY)
FY2017
FY2018
FY2019
YoY
Results
Results
Results
Change
Net premiums written
1,861.5
1,895.0
1,969.9
74.8
Net premiums earned*2
1,860.2
1,875.9
1,917.2
41.2
Net incurred losses*1
1,142.4
1,312.7
1,270.8
- 41.9
Business expenses
605.4
611.1
638.2
27.0
Corporate expenses
234.2
230.6
233.8
3.2
Agency commissions
371.2
380.5
404.3
23.7
(Reference) All lines: W/P basis
Combined ratio*1
92.7%
99.4%
96.0%
- 3.4pt
Loss ratio*1
62.0%
68.8%
65.2%
- 3.6pt
Expense ratio
30.7%
30.6%
30.8%
0.2pt

*1 Including loss adjustment expenses

*2 Excluding provision for nat-cat underwriting reserves Copyright (c) 2020 Tokio Marine Holdings, Inc.

Fell 3.7 points YoY to 66.3% mainly due to:

  • Drop in net incurred losses relating to natural catastrophes (-¥75.9bn,-4.2 points)
  • Decrease in provision for foreign currency denominated outstanding claims reserves due to FX fluctuations
  • Increase in large and medium size losses
  • Expense Ratio

Increased 0.1 point YoY to 32.4% mainly due to:

  • Increase in agency commissions and business expenses caused by the consumption tax increase and other factors
  • Combined Ratio

Improved 3.6 points YoY to 98.7% due to the above factors, etc.

11

TMNF NPW & Loss Ratio

Consolidated Domestic Life

Domestic

  • Net Premiums Written by Line

(billions of JPY, except for %)

FY2018
FY2019
YoY

Non-Life

  • Major Factors of Changes in NPW

International

Results
Results
Change
%
Fire
281.9
321.8
39.9
14.2%
Marine
62.7
65.3
2.5
4.1%
P.A.
173.3
179.0
5.6
3.3%
Auto
1,065.1
1,078.3
13.2
1.2%
CALI
270.5
276.8
6.3
2.3%
Other
313.0
326.0
13.0
4.2%
Total
2,166.6
2,247.5
80.8
3.7%
Private insurance
1,895.0
1,969.9
74.8
4.0%
Total
  • E/I Loss Ratio by Line
FY2018
FY2019
YoY
Results
Results
Change
Fire
122.8%
91.7%
- 31.1pt
Marine
74.7%
78.2%
3.5pt
P.A.
55.0%
55.5%
0.4pt
Auto
62.3%
60.8%
- 1.4pt
Other
57.4%
65.2%
7.8pt
Private insurance
70.0%
66.3%
- 3.7pt
Total

Copyright (c) 2020 Tokio Marine Holdings, Inc.

  • Fire: Grew mainly due to the expanded coverage, greater number of policies written, and contract reviews before the product revision in October 2019
  • Marine: Grew in hull insurance
  • P.A.: Grew mainly due to an increase in the number of policies in Japan
  • Auto: Grew mainly due to a rise in per-policy premiums
  • CALI: Grew mainly due to an increase in the number of policies that reached maturity
  • Other:Grew mainly due to the sales expansion of Super Business Insurance, etc.
  • Major Factors of Changes in E/I Loss Ratio
  • Fire: Improved mainly due to a drop in net incurred losses relating to natural catastrophes
  • Marine: Rose, despite a drop in net incurred losses relating to natural catastrophes, due to an increase in the number of small
    losses and occurrence of large and medium size losses in cargo insurance
  • P.A.: Rose mainly due to increases in losses from income

insurance and net incurred losses relating to overseas travel insurance riders

  • Auto: Improved mainly due to reductions in net incurred losses relating to natural catastrophes and in the frequency of accidents
  • Other:Rose, despite a decline in net incurred losses relating to
natural catastrophes, mainly due to an increase in large and
12
medium size losses

TMNF Asset Management Results

Consolidated Domestic Life

Domestic

Non-Life

International

  • Net Investment Income and Other
(billions of JPY)
- Net investment income and other decreased by ¥41.4bn
FY2018
FY2019
YoY
Results
Results
YoY to ¥182.0bn
Change
Net investment income and other
223.5
182.0
- 41.4
Net investment income
258.7
220.7
- 37.9
Net interest and dividends income
Net interest and dividends income
183.5
151.4
- 32.1
¥32.1bn decrease YoY to ¥151.4bn mainly due to the
Interest and dividends
224.4
189.2
- 35.1
following factors:
65.7
66.5
0.8
Dividends from foreign stocks:
Dividends from domestic stocks
Dividends from foreign stocks
102.9
63.0
- 39.8
The impact of loss of dividends associated with
Income from domestic bonds
22.2
20.7
- 1.5
reinsurance businesses divestment despite an
Income from foreign bonds
4.8
4.1
- 0.7
increase in dividends income from overseas
subsidiaries
Income from other domestic securities*1
2.3
2.1
- 0.2
Income from other foreign securities*2
15.1
20.8
5.6
Transfer of investment income
- 40.8
- 37.8
3.0
Net capital gains
on deposit premiums
Net capital gains
75.1
69.3
- 5.7
¥5.7bn decrease YoY to ¥69.3bn mainly due to the following
Gains/Losses on sales of securities
96.1
110.6
14.5
factors:
Impairment losses on securities
- 3.7
- 22.1
- 18.3
Impairment losses on securities:
Gains/Losses on derivatives
- 19.6
- 15.7
3.9
The impact of falls in market prices of business-
Other investment income and expenses
0.6
0.5
- 0.1
related equities, etc.
Others
1.8
- 3.8
- 5.7
Other ordinary income and expenses
- 35.2
- 38.7
- 3.5
¥78.0bn capital gains from the sales of business-related
*1 Income from domestic securities excluding domestic stocks and domestic bonds.
equities, ¥6.0bn decrease YoY
*2 Income from foreign securities excluding foreign stocks and foreign bonds.
Note: Plus and minus of the figures in the above table correspond to positive and negative to profit respectively.
(Sales of business-related equities was ¥107.0bn)
Copyright (c) 2020 Tokio Marine Holdings, Inc.
13

NF Financial Results

Consolidated Domestic Life

Domestic

  • Change in Major P/L Items
(billions of JPY)
FY2018
FY2019
YoY
Results
Results

Non-Life

  • Underwriting Profit

International

Change
Underwriting profit/loss
1.5
2.7
1.2
(Underwriting profit/loss: excluding
- 2.4
- 0.2
2.2
provision/reversal of catastrophe loss reserves)
Net premiums written (Private insurance)
126.4
131.7
5.3
Net premiums earned (Private insurance)*1
125.7
129.6
3.9
Net incurred losses (Private insurance)*2
- 85.3
- 80.5
4.8
- 14.8
- 12.1
2.6
Natural catastrophe losses
Other than above
- 70.5
- 68.3
2.1
Business expenses (Private insurance)
- 44.5
- 45.3
- 0.7
Provision/Reversal of catastrophe loss reserves
4.0
3.0
- 0.9
7.2
2.7
- 4.5
Fire
Auto
- 2.7
- 2.7
- 0.0
Net investment income (loss) and other
3.9
3.6
- 0.3
Net investment income/loss
4.3
4.0
- 0.3
4.4
4.7
0.2
Interest and dividends
Gains/Losses on sales of securities
1.3
3.1
1.7
Impairment losses on securities
- 0.0
- 1.2
- 1.2
Gains/Losses on redemption of securities
0.9
0.0
- 0.9
Ordinary profit/loss
5.0
5.7
0.7
Extraordinary gains/losses
0.5
- 0.0
- 0.6
Net income/loss
4.4
3.7
- 0.6
Loss ratio (Private insurance, E/I basis)*1*2
67.9%
62.1%
- 5.8pt
Expense ratio (Private insurance)
35.3%
34.4%
- 0.8pt
E/I Combined ratio (Private insurance)*1*2
103.1%
96.6%
- 6.6pt
*1 Excluding provision for nat-cat underwriting reserves

*2 Including loss adjustment expenses (Notes)

  1. Plus and minus of the figures in the above table correspond to positive and negative to profit respectively
  2. Private insurance includes all lines excluding compulsory automobile liability insurance and residential earthquake insurance

Copyright (c) 2020 Tokio Marine Holdings, Inc.

¥1.2bn increase YoY to ¥2.7bn mainly due to the following factors:

  • Net premiums written (Private insurance)
    • Increase due to sales expansion in fire and specialty insurance
    • Net incurred losses (Private insurance)
      • Decrease in net incurred losses relating to natural catastrophes
      • Decrease in losses in auto
    • Catastrophe loss reserves
      • Decrease in takedown due to a decrease in claims paid relating to natural catastrophes
  • Net Investment Income and Other

¥0.3bn decrease YoY to ¥3.6bn due to an increase in impairment losses on securities, etc. despite an increase in gains/losses on sales of securities due to an increase in sales of business-related equities

  • Net Income

¥0.6bn decrease YoY to ¥3.7bn due to the above factors and a decline in extraordinary gains/losses

14

TMNL Financial Results

Consolidated Domestic Life

Domestic

  • Annualized Premiums (ANP)

Non-Life

International

(billions of JPY)
FY2018
FY2019
YoY
Results
Results
Change
%
New policies ANP
74.6
40.5
- 34.1
-45.7%
In-force policies ANP
857.7
837.2
- 20.5
-2.4%
  • Key Figures in Financial Accounting
(billions of JPY)
FY2018
FY2019
Results
Results
YoY
Change
Ordinary income
1,017.1
993.7
- 23.3
Insurance premiums and other
906.7
875.1
- 31.5
Net income
27.3
34.2
6.8
Ordinary profit
34.7
40.6
5.8
(-) Capital gains / losses
- 13.4
- 8.5
4.9
(-)Non-recurring income / losses
- 0.1
- 0.3
- 0.2
Core operating profit
48.4
49.5
1.1
  • Business Unit Profits
(billions of JPY)
FY2018
FY2019
YoY
Results
Results
Change
Increase in MCEV*
- 158.6
- 70.3
88.3
Value of new business +
78.3
62.8
- 15.5
Existing business contribution
* Excluding capital transactions

Copyright (c) 2020 Tokio Marine Holdings, Inc.

  • New Policies ANP
    • 45.7% drop YoY mainly due to the impact of sales suspension of some insurance for corporations (Rose 5.0% YoY excluding the impact of sales suspension)
  • In-forcePolicies ANP
    • 2.4% decline YoY as an increase through new policies was smaller than a decrease through cancellation, etc. following the sales suspension
  • Net Income
    • ¥6.8bn increase YoY to ¥34.2bn mainly due to a decrease in agency commissions and in net provision for underwriting reserves following the sales suspension and an increase in gains on sales of securities despite an increase in system development expenses and in death benefits
  • Business Unit Profits (Increase in MCEV)
    • Increased by ¥88.3bn YoY to ¥70.3bn mainly due to a smaller yen interest rate decline
    • "Value of new business value + Existing business contribution" fell ¥15.5bn YoY to ¥62.8bn due to a decrease in value of new business through the impact of lower interest rates and the sales suspension

15

International financial results (Net Premiums Written)

Consolidated Domestic Life

Domestic

Non-Life

International

(billions of JPY, except for %)
FY2018
FY2019
Results
Results
YoY
(Ref.)
As of end-
As of end-
YoY
Applied FX rate
Dec. 2018
Dec. 2019
Change
％
(Excluding
(USD/JPY)
*5
JPY 111.0
JPY 109.5
FX effects)
North America*1
1,107.9
1,124.0
16.0
1.5%
2.8%
Philadelphia
373.0
369.2
- 3.7
-1.0%
0.3%
Delphi
270.7
278.2
7.5
2.8%
4.1%
TMHCC
387.2
399.1
11.8
3.1%
4.4%
Europe & Middle East
153.2
196.1
42.8
28.0%
24.3%
& Africa*2
South &
134.3
136.0
1.6
1.3%
6.1%
Central America
Asia & Oceania
149.3
184.5
35.1
23.6%
22.6%
Reinsurance*3
129.7
-
- 129.7
-
-
Total Non-Life*4
1,674.6
1,649.5
- 25.0
-1.5%
-0.6%
Life
91.7
92.0
0.2
0.3%
-1.0%
Total
1,766.3
1,741.6
- 24.7
-1.4%
-0.6%
Total
1,636.6
1,741.6
105.0
6.4%
7.3%
(Except for Reinsurance)

*1 North American figures include European and Reinsurance businesses of TMHCC, but not include North American business of TMK

*2 Figures of "Europe, Middle East & Africa" include North American business of TMK, but not include European and Reinsurance businesses of TMHCC *3 Reinsurance figures are those of the reinsurance businesses divested

*4 Total Non-Life figures include some life insurance figures of composite overseas subsidiaries *5 Excluding FX effects due to yen conversion

  • Grew 6.4% YoY (excluding the impact of the divestment of reinsurance businesses) on the back of strong fundamentals in each business.
    • Major Factors of Changes

North America (See P. 18-20 for the details)

  • Philadelphia: Although premiums were raised for the
    renewed contracts(FY2018: 3.2% → FY2019: 7.2%), NPW shrank due to a reduction of exposures of books with weak profitability and the stronger yen.
  • Delphi: NPW rose thanks to the expanded underwriting of non-life insurance.
  • TMHCC: Despite a smaller revenue from medical stop-loss due to the underwriting practices focusing on profitability, NPW grew thanks to the expanded underwriting of segments outside the U.S.

Europe, Middle East & Africa

  • Although a focus placed on the businesses and segments with high profitability following business restructuring reduced NPW in Europe, the new contribution of Hollard (+¥48.9bn) led to an overall increase in NPW.

South & Central America

  • NPW increased due to the expanded underwriting of auto and other insurance in Brazil.

The above figures of International Insurance Business are the total of foreign branches of TMNF, equity method investees, and non-consolidated companies, etc. which are aligned with the disclosure format of our IR materials from before.

Asia & Oceania

  • NPW rose thanks to a growth in underwriting in India, Thailand and elsewhere, and the new consolidation of Safety (+¥21.5bn).
Copyright (c) 2020 Tokio Marine Holdings, Inc.
16

International financial results (Business Unit Profits)

Consolidated Domestic Life

Domestic

Non-Life

International

(billions of JPY, except for %)

- Despite the worsening loss ratio in North America, business
FY2018
FY2019
Results
Results
YoY
As of end-
As of end-
Applied FX rate
Dec. 2018
Dec. 2019
Change
％
(USD/JPY)
JPY 111.0
JPY 109.5
North America*1
153.0
147.2
- 5.7
-3.8%
Philadelphia
43.9
27.0
- 16.8
-38.5%
Delphi
58.5
76.5
18.0
30.7%
TMHCC
45.3
41.9
- 3.4
-7.6%
Europe & Middle East
- 0.1
2.2
2.4
-
& Africa*2
South &
9.2
10.8
1.5
16.7%
Central America
Asia & Oceania
12.0
16.6
4.5
38.0%
Reinsurance*3
13.0
-
- 13.0
-
Total Non-Life*4
187.8
179.0
- 8.7
-4.7%
Life
- 0.7
12.9
13.6
-
Total
176.2
179.5
3.2
1.8%

(Ref.)

YoY

(Excluding FX effects)*5

-2.5%

-37.6%

32.5%

-6.4%

-

22.4%

35.8%

-

-3.6%

-

3.0%

unit profits grew ¥16.3bn YoY (excluding the impact of the
divestment of reinsurance businesses) thanks to factors
such as a decline in natural catastrophes (+¥12.6bn), larger
investment income, and greater profits in life insurance
business.
  • Major Factors of Changes

North America (See P. 18-20 for the details)

  • Philadelphia: Profits shrank due to an increase in provision for the past reserve of liability (-¥23.1bn).
  • Delphi: Profits grew thanks to the improved underwriting profit and the increased investment income.
  • TMHCC: Profits shrank mainly due to weaker earnings in the Non-Life in North America and A&H segments caused by the deteriorating loss ratios in crop insurance from unstable weather and other factors and in medical stop-loss from rising medical costs.

Europe, Middle East & Africa: Reinsurance

  • Despite the shrinking profits in TMK non-Lloyd's operation due to large losses and so on, profits grew thanks to the improved profitability of Lloyd's business and the new contribution from Hollard (+¥1.3bn).

South & Central America

  • Profits grew due to the improved profits in auto insurance and other businesses in Brazil.
Total
163.2
179.5
16.3
10.0%
11.2%
(Except for Reinsurance)
*1
North American figures include European and Reinsurance businesses of TMHCC, but not include North American business of TMK
*2
Figures of "Europe, Middle East & Africa" include North American business of TMK, but not include European and Reinsurance businesses of TMHCC
*3
Reinsurance figures are those of the reinsurance businesses divested
*4
Total Non-Life figures include some life insurance figures of composite overseas subsidiaries
*5
Excluding FX effects due to yen conversion

Asia & Oceania

  • Profits increased thanks to the improved profits in Thailand and China and the impact of equity sales gains at Safety (+¥1.8bn).

Life Insurance

  • Profits rose due to factors such as the rising stock prices and lower interest rates in Singapore.

The above figures of International Insurance Business are the total of foreign branches of TMNF, equity method investees, and non-consolidated companies, etc. which are aligned with the disclosure format of our IR materials from before.

Copyright (c) 2020 Tokio Marine Holdings, Inc.
17

International financial results (Philadelphia)

Consolidated Domestic Life

Domestic

  • Changes in Major P/L Items

(billions of JPY, except for % and pt)

Non-Life

International

FY2018
FY2019
Results
Results
YoY
As of end-
As of end-
FX rates
Dec. 2018
Dec. 2019
Change
％
（USD/JPY）
JPY 111.0
JPY 109.5
Net premiums written
373.0
369.2
-3.7
-1.0%
Net premium earned
363.3
371.4
8.0
2.2%
Net incurred losses
238.4
268.1
29.6
12.4%
12.7
12.2
-0.5
-4.0%
Nat-Cat losses
111.3
113.6
2.2
2.1%
Commissions / Other Underwriting expenses
Underwriting profit
13.5
-10.3
-23.8
-176.5%
Net investment income / loss
35.0
38.5
3.5
10.0%
Business unit profits
43.9
27.0
-16.8
-38.5%
Loss ratio*1
65.6%
72.2%
6.6pt
-
Expense ratio*1
30.7%
30.6%
-0.1pt
-
Combined ratio*1
96.3%
102.8%
6.5pt
-

*1: Denominator used is net premiums earned

(Ref.) YoY (Excluding FX effects)*2

0.3%

3.6%

13.9% -2.7% 3.4% -177.5% 11.5% -37.6%

-

-

-

*2: Excluding FX effects due to yen conversion

Copyright (c) 2020 Tokio Marine Holdings, Inc.
18

International financial results (Delphi)

Consolidated Domestic Life

Domestic

  • Changes in Major P/L Items
(billions of JPY, except for % and pt)
FY2018
FY2019
Results
Results
YoY
(Ref.)
YoY
As of end-
As of end-
(Excluding
FX rates
Dec. 2018
Dec. 2019
Change
％
FX effects)*2
（USD/JPY）
JPY 111.0
JPY 109.5
Net premiums written
270.7
278.2
7.5
2.8%
4.1%
Net premium earned
263.9
269.8
5.9
2.3%
3.6%
Net incurred losses
203.9
190.3
-13.6
-6.7%
-5.5%
-
-
-
-
-
Nat-Cat losses
70.8
74.8
4.0
5.7%
7.1%
Commissions / Other Underwriting expenses
Underwriting profit
-10.8
4.6
15.5
-
-
Net investment income / loss
125.1
163.4
38.2
30.6%
32.3%
Business unit profits
58.5
76.5
18.0
30.7%
32.5%
Loss ratio*1
77.3%
70.5%
-6.8pt
-
-
Expense ratio*1
26.8%
27.8%
0.9pt
-
-
Combined ratio*1
104.1%
98.3%
-5.9pt
-
-

Non-Life

International

  • Net Premiums Written by Segment

(billions of JPY, except for %)

  • Loss Ratio by Segment
FY2018
FY2019
Results
Results
YoY
As of end-
As of end-
FX rates
Dec. 2018
Dec. 2019
Change
％
（USD/JPY）
JPY 111.0
JPY 109.5
Non-life
126.0
140.2
14.2
11.3%
Life
144.6
137.9
-6.7
-4.6%
Total
270.7
278.2
7.5
2.8%

(Ref.) YoY (Excluding FX effects)*2

12.7% -3.4% 4.1%

FY2018
FY2019
Results
Results
Change
Non-life*1
70.8%
70.4%
-0.4pt
Life*1
82.5%
70.6%
-11.9pt
Total*1
77.3%
70.5%
-6.8pt

*1: Denominator used is net premiums earned

*2: Excluding FX effects due to yen conversion

Copyright (c) 2020 Tokio Marine Holdings, Inc.
19

International financial results (TMHCC)

Consolidated Domestic Life

Domestic

  • Changes in Major P/L Items
(billions of JPY, except for % and pt)
FY2018
FY2019
Results
Results
YoY
(Ref.)
YoY
As of end-
As of end-
(Excluding
FX rates
Dec. 2018
Dec. 2019
Change
％
FX effects)*2
（USD/JPY）
JPY 111.0
JPY 109.5
Net premiums written
387.2
399.1
11.8
3.1%
4.4%
Net premium earned
377.8
385.4
7.6
2.0%
3.4%
Net incurred losses
252.6
265.5
12.8
5.1%
6.5%
5.8
1.3
-4.4
-76.8%
-76.5%
Nat-Cat losses
85.0
88.5
3.4
4.1%
5.5%
Commissions / Other Underwriting expenses
Underwriting profit
30.4
23.1
-7.3
-24.1%
-23.1%
Net investment income / loss
25.1
27.9
2.7
10.9%
12.3%
Business unit profits
45.3
41.9
-3.4
-7.6%
-6.4%
Loss ratio*1
66.9%
68.9%
2.0pt
-
-
Expense ratio*1
22.5%
23.0%
0.5pt
-
-
Combined ratio*1
89.4%
91.9%
2.5pt
-
-

Non-Life

International

  • Net Premiums Written by Segment

(billions of JPY, except for %)

  • Loss Ratio by Segment
FY2018
FY2019
Results
Results
YoY
As of end-
As of end-
FX rates
Dec. 2018
Dec. 2019
Change
％
（USD/JPY）
JPY 111.0
JPY 109.5
Non-life : North America
145.5
156.8
11.2
7.7%
A&H
157.9
142.1
-15.7
-10.0%
International
83.7
100.1
16.3
19.6%
Total
387.2
399.1
11.8
3.1%

(Ref.) YoY (Excluding FX effects)*2

9.1% -8.8% 21.1%

4.4%

FY2018
FY2019
Results
Results
Change
Non-life : North America*1
67.1%
72.0%
4.9pt
A&H*1
79.1%
81.6%
2.5pt
International*1
42.3%
44.9%
2.6pt
Total*1
66.9%
68.9%
2.0pt

*1: Denominator used is net premiums earned

*2: Excluding FX effects due to yen conversion

Copyright (c) 2020 Tokio Marine Holdings, Inc.
20

III. FY2020 Profits (Pre COVID-19 Basis)

Assumptions used for FY2020 Profits

(Pre COVID-19 Basis)

FX rate (USD / JPY)
Nikkei Stock
Average
JPY108.83
JPY18,917
(End of Mar. 2020)
(End of Mar. 2020)
Copyright (c) 2020 Tokio Marine Holdings, Inc.
21

FY2020 Consolidated Profits (Pre COVID-19 Basis)

Consolidated Domestic Life

Domestic

Non-Life International

(billions of JPY)

FY2019
FY2020
YoY
Results
Profits
(Pre COVID-19 Basis)
Change
Adjusted Net Income
286.7
approx. 410.0
about 120.0
Adjusted ROE
8.2%
approx. 12.2%
about 4.0pt
Domestic Non-Life
25.9
134.0
108.0
TMNF
26.0
124.0
97.9
Domestic Life*1
-70.3
67.0
137.3
TMNL
-70.3
66.0
136.3
International Insurance
179.5
177.0
-2.5
North America
147.2
149.0
1.7
Philadelphia
27.0
40.0
12.9
Dlephi
76.5
62.0
-14.5
TMHCC
41.9
44.0
2.0
Europe & Middle East
2.2
8.0
5.7
& Africa
South & Central America
10.8
6.0
-4.8
Asia & Oceania
16.6
11.0
-5.6
International Non-Life*2
179.0
176.0
-3.0
International Life
12.9
4.0
-8.9
Pure
-
9.0
9.0
Financial & General
5.3
5.0
-0.3

*1: Excluding capital transactions

*2: International Non-Life figures include some life insurance figures of composite overseas subsidiaries

Copyright (c) 2020 Tokio Marine Holdings, Inc.
22

FY2020 TMNF Profits (Pre COVID-19 Basis)

Key Figures (billions of JPY)

- Underwriting Profit

Consolidated Domestic Life

Domestic

Non-Life International

FY2019
FY2020
Results
Profits
YoY
a
(Pre COVID-19 Basis)
Change
Net premiums written
1,969.9
2,005.0
35.0
（Private insurance）
Underwriting profit/loss
38.4
91.0
52.5
Net investment income（loss）
182.0
153.2
- 28.7
and other
Net income
169.9
182.0
12.0
Business unit profit
26.0
124.0
97.9

Projected to grow by ¥52.5bn YoY to ¥91.0bn mainly due to the following factors:

  • Increase in NPW (¥35.0bn) on the back of the expanded coverage of auto insurance, sales expansion of Super Business Insurance, etc. despite a decrease in NPW in fire due to the reversal effect of the last-minute demand in FY2019, etc. (-¥12.3bn)
  • Decrease in net incurred losses relating to natural catastrophes* (¥107.5bn)
  • Increase in business expenses mainly due to an increase in agency commissions associated with NPW increase and consumption tax increase, etc. (-¥19.2bn)
  • Increase in provision for catastrophe loss reserves (-¥84.0bn)

*The FY2020 budget for natural catastrophes is increased by ¥5.0bn based on the occurrence of natural catastrophes and other factors.

  • Net Investment Income and Other

Projected to decline by ¥28.7bn YoY to ¥153.2bn mainly due to the following factors:

  • Drop in dividends from overseas subsidiaries (eliminated through consolidation)
    • Reaction to gains on sales of securities in FY2019
    • Reaction to impairment losses on securities in FY2019
  • Net Income

Projected to increase ¥12.0bn YoY to ¥182.0bn reflecting the above and other factors

  • Business Unit Profits

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Projected to increase by ¥97.9bn YoY to ¥124.0bn due to the above and other factors

23

FY2020 TMNL Profits (Pre COVID-19 Basis)

Key Figures (billions of JPY)

Consolidated Domestic Life

Domestic

Non-Life International

FY2019
FY2020
Results
Profits
YoY
a
(Pre COVID-19 Basis)
Change
New policies ANP
40.5
43.0
2.4
Core operating profit
49.5
61.0
11.4
Net income
34.2
40.0
5.7
Business unit profit*1
- 70.3
66.0
136.3
Value of new business +
62.8
75.0
12.2
Existing business contribution
*1:Excluding capital transaction
  • New Policies ANP
    • Projected to increase by ¥2.4bn YoY due to the sales expansion of protection-type products and installment variable annuities, etc.
  • Net Income
    • Projected to increase by ¥5.7bn YoY mainly due to the reversal effect of increase in system development expenses and death benefits in FY2019
  • Business Unit Profit (Increase in MCEV)
    • Projected to improve by ¥136.3bn YoY mainly due to the reversal effect of smaller profit in FY2019 due to the lower interest rates (approx. ¥120.0bn)
    • "Value of new business + Existing business contribution" is projected to increase by ¥12.2bn YoY to ¥75.0bn thanks to an increase in new policies, accumulation of in-force policies, etc.
Copyright (c) 2020 Tokio Marine Holdings, Inc.
24

FY2020 International Profits (Pre COVID-19 Basis) (NPW)

Consolidated Domestic Life

Domestic

Non-Life International

NPWs by Business Domain (billions of JPY)

- NPWs are projected to grow 1.8% YoY on a local
currency basis thanks to factors such as the execution of
FY2019
FY2020
Profits
Results
YoY
(Pre COVID-19 Basis)
As of end-
As of end-
Applied FX rate
Dec. 2019
Mar. 2020
Change
％
(USD/JPY)
JPY 109.5
JPY 108.8
North America*1
1,124.0
1,147.0
22.9
2.0%
Philadelphia
369.2
368.0
- 1.2
- 0.3%
Delphi
278.2
287.0
8.7
3.2%
TMHCC
399.1
417.0
17.8
4.5%
Europe & Middle East &
196.1
155.0
- 41.1
- 21.0%
Africa*2
South &
136.0
111.0
- 25.0
- 18.4%
Central America
Asia & Oceania
184.5
186.0
1.4
0.8%
Total Non-Life*3
1,649.5
1,599.0
- 50.5
- 3.1%
Life
92.0
95.0
2.9
3.3%
Pure
-
-
-
-
Total
1,741.6
1,694.0
- 47.6
- 2.7%

(Ref.) YoY (Excluding FX effects)*4

2.8%

0.3%

3.8%

5.2%

  • 11.7%
    6.3%

7.6%

1.3%

10.9%

-

1.8%

growth measures in each business and rate increases
but are projected to decrease 2.7% YoY on the Japanese
yen basis due to the appreciation of the yen (-¥78.1bn)
Major Factors of Changes

North America

  • Philadelphia: Projected to be flat as the reduction caused by the underwriting practice focusing on profitability will be offset by rate increases for renewal books, and so on
  • Delphi: Projected to grow due to the expanded underwriting of non-life insurance
  • TMHCC: Projected to increase due to the contribution of a business purchased as a bolt-on acquisition, in addition to the growth in each segment

Europe, Middle East & Africa(*)

  • Projected to decline due to the run-off of the company business in Europe and an increase in reinsurance to stabilize profitability
  1. Including the impact (-¥12.7bn) of the change in management accounting principles on Hollard. There is no impact on earnings

South & Central America

  • Projected to decline due to the impact of the stronger yen, although the underwriting of products other than auto insurance will be expanded

Asia & Oceania

  • Projected to increase due to factors such as the expanded underwriting of auto insurance in India and Thailand

*1 North American figures include European and Reinsurance businesses of TMHCC, but not include North American business of TMK

*2 Figures of "Europe & Middle East & Africa" include North American business of TMK, but not include European and Reinsurance businesses of TMHCC *3 Total Non-Life figures include some life insurance figures of composite overseas subsidiaries

*4 Excluding FX effects due to yen conversion

Life Insurance

  • Projected to increase due to factors such as an increase in sales in Thailand and India

The above figures of International Insurance Business are the total of foreign branches of TMNF, equity method investees, and non-consolidated companies, etc. which are aligned with the disclosure format of our IR materials from before.

Copyright (c) 2020 Tokio Marine Holdings, Inc.
25

FY2020 International Profits (Pre COVID-19 Basis) (BUP)

Consolidated Domestic Life

Domestic

Non-Life International

BUPs by Business Domain (billions of JPY)

- Projected to grow 1.9% YoY on a local currency basis due to
the new consolidation of Pure, a reaction to provisions for
FY2019
FY2020
Results
Profits
YoY
(Pre COVID-19 Basis)
As of end-
As of end-
Applied FX rate
Dec. 2019
Mar. 2020
Change
％
(USD/JPY)
JPY 109.5
JPY 108.8
North America*1
147.2
149.0
1.7
1.2%
Philadelphia
27.0
40.0
12.9
48.0%
Delphi
76.5
62.0
- 14.5
- 19.0%
TMHCC
41.9
44.0
2.0
5.0%
Europe & Middle East &
2.2
8.0
5.7
247.8%
Africa*2
South &
10.8
6.0
- 4.8
- 44.6%
Central America
Asia & Oceania
16.6
11.0
- 5.6
- 34.1%
Total Non-Life*3
179.0
176.0
- 3.0
- 1.7%
Life
12.9
4.0
- 8.9
- 69.0%
Pure
-
9.0
9.0
-
Total
179.5
177.0
- 2.5
- 1.4%

(Ref.) YoY (Excluding FX effects)*4

1.9%

49.0%

  • 18.5%
    5.7%

298.9%

  • 27.5%
  • 29.6%
    1.1%
  • 67.2%

-

1.9%

reserves in the previous fiscal year, and so on, although there
are negative factors such as the assumption that natural
catastrophes will be at the same level as the average year
(-¥18.6bn) and a drop in investment income; projected to
decline ¥2.5bn on the Japanese yen basis due to the
appreciation of the yen (-¥5.7bn)
  • Main Factors of Change

North America

  • Philadelphia: Despite the above-mentioned negative factors, profits will grow due to factors such as a reaction to the past reserve provision in FY2019 (+¥23.5bn)
  • Delphi: Profits are expected to drop due to factors such as a smaller investment income and the worsening loss ratio of long tail products caused by the lower discount rate
  • TMHCC: Despite the above-mentioned negative factors, profits are projected to rise thanks to factors such as a reaction to the reserve provision in FY2019 for crop insurance and medical stop-loss

Europe, Middle East & Africa

  • In Europe, profits will rise thanks to the improved profitability of Lloyd's and a decline in large losses, despite the above- mentioned negative factors

South & Central America

  • Profits are projected to shrink due to factors such as the worsening loss ratio in Brazil caused by the intensifying competition and lower income yield

*1 North American figures include European and Reinsurance businesses of TMHCC, but not include North American business of TMK

*2 Figures of "Europe & Middle East & Africa" include North American business of TMK, but not include European and Reinsurance businesses of TMHCC *3 Total Non-Life figures include some life insurance figures of composite overseas subsidiaries

*4 Excluding FX effects due to yen conversion

The above figures of International Insurance Business are the total of foreign branches of TMNF, equity method investees, and non-consolidated companies, etc. which are aligned with the disclosure format of our IR materials from before.

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Asia & Oceania

  • Profits are expected to decline due to factors such as the net incurred losses of nat-cat at the level equivalent to the average year and a reaction to equity sales gains posted in Thailand in FY2019

Life Insurance

Profits are projected to decline due to factors such as a reaction to the higher stock prices and lower interest rates in

FY2019 in Singapore (-¥8.1bn)

26

Ⅳ. Economic Solvency Ratio

Copyright (c) 2020 Tokio Marine Holdings, Inc.
27

Target Range of Economic Solvency Ratio (ESR)

  • ESR is calculated using capital model based on 99.95%VaR (equivalent to AA credit rating)
  • Target Range of ESR is 150 - 210% to achieve financial soundness and profitability simultaneously

210%

Target

Range

150%

100%

Implementation of ;

Business investment, and/or

Additional risk-taking, and/or

Shareholder return

consideration of ; Business investment, and/or Additional risk-taking, and/or Shareholder return

to recover the capital level through accumulation of

of risk level by reducing risk taking activities

risking

Consideration of capital increase of shareholder return policy

Copyright (c) 2020 Tokio Marine Holdings, Inc.
28

ESR and Sensitivity (as of March 31, 2020)

  • ESR declined to 153% (within target range) due to larger credit spreads in the U.S., acquisition of the Pure Group, and shareholder return, etc., despite the positive impact of profit contribution in 2H FY19
ESR
ESR sensitivity

173%

Net

asset value

Risk

4.6

2.6 trillion

trillion yen yen

Factors of change in net asset value

  • Contribution of 2H FY19 adjusted net income
  • Falling price of business-related equities
  • Acquisition of Pure Group
  • Issuance of subordinated bonds of capital nature

Shareholder return etc.

Factors of change in risk

  • Increase in U.S. credit spreads
  • Sales of business-related equities, etc.

153%*

Net

asset

value

Risk

2.7 4.2

trillion

trillion yen yen

Mar. 31, 2020
153%
Stock price
+30%
159%
-30%
147%
Interest rate
+50bp
157%
-50bp
142%
FX rate
10%
154%
appreciation
10%
152%
depreciation
Sept. 30, 2019
Mar. 31, 2020
¥21,755
Nikkei Stock Average
¥18,917
0.38%
30Y JPY interest rate
0.44%

* Net asset value of overseas subsidiaries is as of Dec. 31, 2019.

Stock price: Continue selling business-related equities

Interest rate: Control the impact of interest rate fluctuations through ALM

FX rate:
Limited impact on ESR

(Ref.) Definition of Net Asset Value

Net
Net assets
Catastrophe
Contingency
Price fluctuation
Goodwill and
Planned
Value of life
Asset
=
+
+
+
-
other intangible
-
distribution to
+
insurance policies
+
Others
Value
(consolidated)
loss reserves
reserves
reserves
fixed assets
shareholders
in-force
Copyright (c) 2020 Tokio Marine Holdings, Inc.
29

Reference

Copyright (c) 2020 Tokio Marine Holdings, Inc.
30

Adjusted Net Income and Business Unit Profit

Adjusted Net Income (Group total)

Enhancing transparency and comparability /

Linking with shareholder return

  • For the Group total, "Adjusted Net Income" based on financial accounting is used from the perspective of enhancing transparency and comparability as well as linking with shareholder return
  • Profit indicator for the Group total as the base for calculating capital efficiency (adjusted ROE) and source of dividends

Business Unit Profits

Creating long-term corporate value

  • For each business domain, "Business Unit Profits" is used from the perspective of accurately assessing corporate value including economic value, etc. for the purpose of long- term expansion
  • Use MCEV (market-consistent embedded value) for domestic life, which reflects the economic value of the business more accurately
Domestic non-life
Gains or losses on sales of
business-related equities
Provision for reserves of capital
nature, etc.
Domestic life
Other than the above
Amortization of goodwill and
other intangible fixed assets

Adjusted Net Income

Included

Excluded

Adjust the financial accounting

basis net income

Excluded

Business Unit Profits

Excluded

Excluded

Increase in MCEV

during the current fiscal year

Excluded

Copyright (c) 2020 Tokio Marine Holdings, Inc.

31

Definition of KPIs

Definition of Adjusted Net Income / Adjusted Net Assets / Adjusted ROE

  • Adjusted Net Income*1
Provision for
Provision for
Gains or losses on sales or
Adjusted
Net income
Provision for
=
+
catastrophe loss
+
+
price fluctuation
-
valuation of ALM*4 bonds
Net Income
(consolidated)*2
contingency
reserves*3
reserves*3
and interest rate swaps
reserves*3
Amortization of
+
goodwill and other
-
intangible fixed
Adjusted Net Assets*1
assets
Gains or losses on sales or
Other extraordinary
valuation of fixed assets and
-
gains/losses,
business investment equities
valuation allowances, etc.
Adjusted
=
Net assets
+
Catastrophe
+
Contingency
+
Price fluctuation
-
Goodwill and other
Net Assets
(consolidated)
loss reserves
reserves
reserves
intangible fixed assets
  • Adjusted ROE
Adjusted
Adjusted
Adjusted
=
÷
Net Assets
ROE
Net Income
(Average balance basis)

Definition of Business Unit Profits

  • Non-lifeinsurance business
Business
Provision for
Provision for
Unit
=
Net income
+
catastrophe loss
+
price fluctuation
-
Profits*1
reserves*3
reserves*3
  • Life insurance business*5
Business
Increase in EV*6
Capital transactions
Unit
=
during the current
-
such as
Profits*1
fiscal year
capital increase
  • Other businesses

Net income determined in accordance with financial accounting principles

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Gains or losses on sales or valuation of ALM*4 bonds and interest rate swaps

Gains or losses on sales or valuation of fixed
Other extraordinary
-
assets, business-related equities and
-
gains/losses,
business investment equities
valuation allowances, etc.

*1: Each adjustment is on an after-tax basis

*2: Net income attributable to owners of the parent

*3: In case of reversal, it is subtracted from the equation

*4: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities

*5: For some of the life insurance companies, Business Unit Profits is calculated by using the definition in Other businesses (head office expenses, etc. are deducted from profits)

*6: EV: Embedded Value. An index that shows the sum of the net present value of profits to be

gained from policies in-force and the net asset value

32

Adjusted Net Income (Group Total) : FY2019 Results

  • Adjusted Net Income for FY2019 rose ¥5.7bn YoY to ¥286.7bn
•
Reconciliation*1
(billions of JPY)

Note: Factors positive to profit are showed with "plus signs"

FY2018 FY2019 YoY

Results Results Change

Net income attributable to owners of the parent

- Major YoY changes in reconciliation

(consolidated)

274.5 259.7 -14.8

Provision for catastrophe loss reserves*2
-97.6
-49.7
47.8
Provision for contingency reserves*2
+1.0
+0.8
-0.2
Provision for price fluctuation reserves*2
+5.7
+6.9
1.2
Gains or losses on sales or valuation of ALM*3 bonds
+1.2
-12.5
-13.7
and interest rate swaps
Gains or losses on sales or valuation of fixed assets
+25.4
+8.5
-16.9
and business investment equities
  • Provision for catastrophe loss reserves
    • Increase mainly due to a drop in net incurred losses relating to natural catastrophes in Domestic Non- Life (increases reconciling amount)
  • Gains or losses on sales or valuation of ALM bonds and interest rate swaps
    • Sales of domestic bonds for the sake of ALM- related position change to corporate bonds (decreases reconciling amount)
Amortization of goodwill and other intangible fixed
+69.7
+77.7
8.0
assets
Other extraordinary gains/losses,
+0.7
-4.8
-5.6
valuation allowances, etc.
Adjusted Net Income
280.9
286.7
5.7
  • Gains or losses on sales or valuation of fixed assets and business investment equities
    • The reversal effect of the deduction of loss on the divestment of reinsurance businesses in FY2018 (decreases reconciling amount)

*1 Each adjustment is on the after-tax basis.

*2 Reversals are subtracted.

*3 ALM: Asset Liability Management. Excluded since it is a counter-balance of ALM related liabilities.

Copyright (c) 2020 Tokio Marine Holdings, Inc.
33

Adjusted Net Assets / Adjusted ROE

(billions of JPY)

Adjusted Net Assets*1
Adjusted ROE
FY2018
FY2019
YoY
Results
Results
Change
Net assets(consolidated)
3,574.2
3,372.1
-202.0
Catastrophe loss
+741.1
+691.5
-49.6
reserves
Contingency reserves
+40.8
+41.6
0.8
Price fluctuation reserves
+78.1
+85.1
6.9
Goodwill and other
-671.3
-949.5
-278.1
intangible fixed assets
Adjusted Net Assets
3,763.1
3,240.9
-522.2

*1 Each adjustment is on an after-tax basis

FY2018
FY2019
YoY
Results
Results
Change
Net income(consolidated)
274.5
259.7
-14.8
Net assets(consolidated)*2
3,689.7
3,473.1
-216.5
Financial acccounting basis
7.4%
7.5%
0pt
ROE
FY2018
FY2019
YoY
Results
Results
Change
Adjusted Net Income
280.9
286.7
5.7
Adjusted Net Assets*2
3,924.7
3,502.0
-422.7
Adjusted ROE
7.2%
8.2%
1.0pt
*2 average balance basis
Copyright (c) 2020 Tokio Marine Holdings, Inc.
34

Reconciliation of Business Unit Profits

  • Domestic Non-Life*1 （TMNF）
FY2018
FY2019
YoY
Results
Results
Net income for accounting purposes
261.3
169.9
-91.4
Provision for catastrophe loss reserves*2
-93.8
-47.0
46.7
Provision for price fluctuation reserves*2
+3.9
+4.3
0.4
Gains or losses on sales or valuation of
+0.7
-12.6
-13.4
ALM*3 bonds and interest rate swaps
Gains or losses on sales or valuation of
fixed assets, business-related equities, and
-66.0
-41.7
24.3
business investment equities
Intra-group dividends
-96.8
-58.6
38.1
Other extraordinary gains/losses,
+9.5
+11.9
2.3
valuation allowances, etc
Business Unit Profits
18.7
26.0
7.2

*1: Each adjustment is on an after-tax basis

*2: In case of reversal, it is subtracted from the equation

*3: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities

*4: Amortization of other intangible fixed assets, head office expenses, etc.

(billions of JPY)

International Insurance*1

FY2018
FY2019
Results
Results
Overseas subsidiaries
155.1
144.3
Net income for accounting purposes
Difference with EV (Life)
-1.2
+8.1
Adjustment of non-controlling interests
-1.5
-2.5
Difference of subsidiaries covered
-1.4
+0.6
Other adjustments*4
+25.4
+28.9
Business Unit Profits
176.2
179.5
Copyright (c) 2020 Tokio Marine Holdings, Inc.
35

TMNL Supplement on MCEV

  • Breakdown of Increase in MCEV*1 (billions of JPY)
Shareholders'
Change in
Value of
economic
new business
dividends
environment
+
1,076.0
-15.1
-132.4
Existing business
contribution, etc.
+62.0
990.5
2018
2019
Year-end MCEV *2
1,076.0
990.5
MCEV Increase① *3
-70.3
MCEV Increase② *4
62.0
*1：Figures are before review by an independent third party
*2：Figures are after payment of shareholders' dividends of the prior fiscal year
*3：Excluding the effects of payment of shareholders' dividends
*4：Excluding the effects of payment of shareholders' dividends and changes in economic environment
  • Breakdown of MCEV Balance & Value of New Business, etc. (billions of JPY)
FY2018
FY2019
YoY Change
Fiscal Year-end MCEV
1,076.0
990.5
- 85.4
Adjusted net worth
1119.5
1,113.0
- 6.5
Value of in-force
- 43.5
- 122.4
- 78.9
Value of new business
59.5
37.3
- 22.2
Value of new business +
78.3
62.8
- 15.5
Existing business contribution
36
Copyright (c) 2020 Tokio Marine Holdings, Inc.
Note: Figures are before review by an independent third party

Disclaimer

These presentation materials include business projections and forecasts relating to expected financial and operating results of Tokio Marine Holdings and certain of its affiliates in current and future periods. All such forward looking information is based on information and assumptions available to Tokio Marine Holdings when the materials were prepared and is subject to a range of inherent risks and uncertainties. Actual results may vary materially from those estimated, anticipated, expected or projected in the accompanying materials and no assurances can be given that any such forward looking information will prove to have been accurate. Investors are cautioned not to place undue reliance on forward looking statements in these materials. Tokio Marine Holdings undertakes no obligation to update or revise any of this forward looking information, whether as a result of new information, recent or future developments, or otherwise.

These presentation materials do not constitute an offering of securities in any jurisdiction. To the extent distribution of these presentation materials or the information included herein is restricted by law, persons receiving these materials must inform themselves of and observe any such restrictions.

For further information...

Investor Relations Group, Corporate Planning Dept.

Tokio Marine Holdings, Inc.

URL : www.tokiomarinehd.com/en/inquiry/

Tel : +81-3-3285-0350

20200520

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Tokio Marine Holdings Inc. published this content on 20 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 May 2020 07:28:09 UTC